Avoiding property negotiation surprises
If you’re looking to buy a new home or invest in the real estate market, especially during this hot market phase, you’ve to bring your best negotiating game. Any property sale negotiation will throw in some surprises, and it’s on you to be ready for them.
We’re calling it: 2021 is the year of the home buyer. Thanks to the overall outlook of the U.S. economy with its strong job market, increased savings, and low mortgage loans, home buying has experienced a meteoric rise this year.
Though there are concerns that home prices are increasing due to a decline in new home listings, they’re unwarranted. According to realtor.com, the national median listing price in September only rose by 8.6% as compared to 2020. This shows that buying property is still, for the most part, affordable. Moreover, the mortgage rates remain at historic lows.
If you’re among the home buyers of 2021, here are three ‘surprises’ that could crop up while negotiating a property sale—and how you can deal with them.
In a hot market, sellers will try to raise the stakes by claiming multiple-offer negotiations. The ensuing bidding war might offset your negotiation. If you’re a totally new home buyer, this might come as a surprise to you.
A way to counter the situation is by preparing yourself for competition. Before making an offer, have clarity about the maximum bid that you can make. This must be your ceiling price beyond which you cannot bid.
Then, start from a lower-yet-still-respectable offer, and if the seller informs you of multiple-offer negotiations, continue up until your highest bid. And if things don’t go as planned, be prepared to walk away rather than overbid.
Going by the listing, you might find a home that checks all the boxes for you. You might even negotiate and begin closing a deal…only to find that the house has hidden flaws.
To avoid this, it’s recommended that you carry out a thorough inspection of the house before negotiating with the seller. A professional inspector will identify any hidden flaws and calculate the cost of repair. Include the repair costs in your offer and use this data to reasonably request a lower price.
Many home sellers worry about an offer settling (that is, coming to fruition). They seek assurance from the buyer that the offer will settle. Without an assurance, they may withdraw from negotiations. One way to provide assurance is through all-cash offers.
Why cash? Compared to the long bureaucratic processes of getting a mortgage, cash settles an offer immediately. Most sellers like the prospect of an immediate signing rather than waiting for an extended period, only to potentially have the deal fall through because it was contingent on the buyer securing a mortgage.
You can also leverage cash offers to negotiate a lower price, and you know what? Most sellers will budge.
Get your negotiations right
Now that you know how to deal with surprises in home buying, get ready to implement them in your next negotiation.
These exchanges can be intimidating, especially if you’re a first-time buyer. Hiring an agent would ease the process. But make sure that the agent communicates with the seller and submits your offer. Always remember that when you cannot reach an agreement, don’t hesitate to walk away.
So, are you ready to get your negotiation right?